Bank of China (Hong Kong) Ltd and Others v. Cheung King Fung Francis and Another
Read the full judgment text of CACV 66/2005 on BabelCite. This Court of Appeal judgment was delivered on 5 July 2005 before Tang JA, Chu J.
Civil procedure – default judgment – application to set aside – application for leave to adduce additional evidence on appeal – service of writ by registered post – deemed service – O. 10 r. 1(3) – O. 59 r. 10 – O. 59 r. 14(12) – guarantees given by co-habitee for banking facilities – alleged drunkenness and undue influence at time of signing – whether single judge's discretion on additional evidence is reviewable afresh – whether Ladd v Marshall conditions apply – standard of review of exercise of discretion – whether 2nd defendant had no notice of the writ – whether defendant has an arguable defence on the merits – guarantees signed in 1997 – writ issued 3 January 2000 and served by registered post 5 January 2000 – default judgment entered 31 January 2000 – application to set aside filed 27 October 2003 – Master Ho refused 16 June 2004 – appeal to Yam J dismissed 10 November 2004 – application for leave to adduce additional evidence refused by Yuen JA 20 June 2005 – both appeals dismissed with costs on 5 July 2005 – Court of Appeal limits its review to whether the judge applied wrong principles of law, gave wholly erroneous weight, failed to take into account relevant matters, or where the judgment was plainly wrong – Ladd v Marshall conditions remain relevant even if not applied with full rigour in default judgment setting aside cases per Forward v West Sussex County Council – defendant must provide convincing evidence of non-receipt of writ – explanation that staff passed all documents bearing 1st defendant's name to him without informing 2nd defendant found incredible in light of prior receipt of demand letter at same address – bank statement showed amount outstanding on asserted crystallisation date was in excess of judgment sum and 2nd defendant produced no evidence to the contrary – affirmation of service held sufficient compliance with O. 10 r. 1(3)(b)(ii) – appeals dismissed with costs.
Legal issues: Standard of review of single judge's discretion on additional evidence under O. 59 r. 14(12) · Whether Yuen JA erred in refusing leave to adduce additional evidence on appeal · Whether the 2nd defendant had no notice of the writ of summons to displace deemed service under O. 10 r. 1(3) · Whether default judgment should be set aside and whether the 2nd defendant has an arguable defence on the merits
Outcome: Both appeals dismissed with costs.
Cited by 21 cases · Cites 1 case
|
CACV 66/2005 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 66 OF 2005 (ON APPEAL FROM HCA NO. 31 OF 2000) ______________ BETWEEN
______________
Before: Hon Tang JA and Chu J in Court Date of Hearing: 5 July 2005 Date of Judgment: 5 July 2005 Date of Reasons for Judgment: 22 July 2005 _________________________________ REASONS FOR JUDGMENT _________________________________
Hon Tang JA (giving the reasons for judgment of the Court): Introduction 1.The writ of summons in this action was issued on 3 January 2000. It was served by registered post on 5 January 2000. On 31 January 2000 judgment in default of notice of intention to defend was entered against the 2nd defendant. 2.The claim against the 2nd defendant was based on 2 guarantees dated 12 August 1997 and 28 October 1997 respectively. By these guarantees, the 2nd defendant guaranteed the banking facilities granted to the 1st defendant by the plaintiff. The plaintiff (the bank) claimed the sum of $728,020.43 being the 1st defendant’s indebtedness to the bank in respect of such banking facilities. 3.On 27 October 2003, the 2nd defendant applied to set aside the judgment. That was refused by Master Ho on 16 June 2004. The 2nd defendant’s appeal was dismissed by Yam J on 10 November 2004. By a notice of appeal dated 19 February 2005, the 2nd defendant has appealed against the decision of Yam J. 4.On 8 June 2005, the 2nd defendant applied under O. 59 r. 10 RHC for leave to adduce additional evidence on appeal. The application was heard by Yuen JA on 16 June 2005 and on 20 June 2005, the decision of Yuen JA refusing leave was handed down. In para 22 of the decision, Yuen JA provided a summary of the additional evidence but the more important evidence goes to the following new issues, viz.,
5.The 2nd defendant has appealed to us pursuant to O. 59 r. 14(12) from the determination of Yuen J. 6.We heard and dismissed both appeals with costs on 5 July 2005. We now provide our reasons. 7.We deal first with the appeal from Yuen JA. Appeal from Yuen JA 8.Mr Arthur Wong who appeared for the 2nd defendant has submitted that on an appeal under O. 59 r. 14(12), we are entitled to exercise our discretion afresh and that Mak Pak Keung v Wong Ip Ming, unreported, CACV 78/2000 which decided otherwise is wrong. This is what Rogers Acting CJHC said in Mak Pak Keung:
Mr Wong also submitted that by analogy with O. 59 r. 3, the appeal should be by way of rehearing. Even so, as para. 59/1/49 in the Hong Kong Civil Procedure 2004 shows, the power of a Court of Appeal on an appeal from an exercise of discretion by a judge is similarly limited. Thus, Mr Wong’s submission is rejected. 9.Mr Wong then submitted that Yuen JA was wrong for the following reasons:
10.On (a), Mr Wong has drawn our attention to Forward v West Sussex County Council [1995] 1 W LR 1469. There, the English Court of Appeal was concerned with an application arising out of a judgment entered in default of notice of intention to defend. On the defendant’s appeal against the judge’s refusal to declare that the writ had not been served on him, the defendant applied for leave to adduce additional evidence. The Master of the Rolls said at page 1474:
11.Here, as is apparent from the judgment of Yam J, he refused to set aside the default judgment because the 2nd defendant did not have a defence on the merits. So there has been a decision on the merits. That explains why Yuen JA seemed inclined to the view that the Ladd v Marshall conditions would apply. 12.But as Yuen JA said in paragraph 31 of her decision:
13.So it does not matter whether in this case there had been a decision on the merits such that the Ladd v Marshall conditions would apply. Moreover, as the judgment of the Master of the Rolls referred to above shows, even if the Ladd v Marshall conditions do not apply with their full rigour, that does not mean they are irrelevant. 14.In para. 53, Yuen JA concluded:
15.So we cannot accept Mr Wong’s submission that the judge has applied wrong principles of law. 16.(b) and (c) can be dealt with together. Mr Wong emphasized that the judge had failed to take into account sufficiently the 2nd defendant’s health problems and personal situations. 17.So far as the 2nd defendant’s allegation that she had a nervous breakdown is concerned, that was specifically dealt with by Yuen JA in para. 44 of her decision. 18.But Mr Wong reminded us that the 2nd defendant claimed to have attempted suicide in 1995 and 1999, and that she had been ill-treated by the 1st defendant from 1995 to 1999. But, these have little to do with the delay identified by Yuen JA 19.Then, it is said that the 2nd defendant had continued to receive medical treatment from 1995 to 2004 for tension headache with anxiety and stress and that she had 4 treatments in 2004 for severe tension headache. 20.On the other hand it is the 2nd defendant’s evidence that she was able to carry on an active social life in 2000 to 2002. There is also an exhibit produced by the 2nd defendant which shows that she was well enough to accept employment as chief interior designer from 14 February 2005. 21.We do not agree that Yuen JA had failed to take into account relevant matters. 22.As for the ground that the judgment was plainly wrong. Mr Wong emphasised that Yuen JA was wrong on the question of delay. He submitted that there were settlement discussions from 2000 to 2003. The evidence does not support any settlement discussion prior to the service of the statutory demand in 2003. Mr Wong referred us to the various dinner parties that the 2nd defendant had attended with officers of the bank in the years 2000, 2001 and 2002. They do not show any settlement discussion at all. Moreover, as the citation at para. 14 above shows, Yuen JA was principally concerned with the delay between the time when the 2nd defendant applied to set aside the judgment (October 2003) and her application for leave to adduce additional evidence on appeal (June 2005). 23.Another reason given by the judge for refusing leave was the unsatisfactory state of the 2nd defendant’s evidence. It was essentially the defendant’s case that she was so drunk that she did not know what she was signing. Secondly, because of her relationship with the 1st defendant, the bank had constructive notice of undue influence 24.So far as the first ground is concerned, we agree with the judge that there is no satisfactory explanation why this allegation had not been made earlier. 25.Moreover it is inconsistent with the affirmations in Chinese that she had filed in support of her application to set aside the judgment. In para. 4 of her first affirmation which was filed on 27 October 2003, she said :
In her affirmation dated 9 March 2004 she said:
26.We believe that these two paragraphs do not sit well with her allegation that she was so befuddled by drink that she did not know what she was signing or that the bank officer was equally drunk. 27.Moreover, there has been no explanation from the 2nd defendant why if she did not know she had signed guarantees, she could have written to the bank on 20 May 1999 that she wanted “to terminate to be guarantor for (the 1st defendant) with immediate effect”, and then, again, by letter dated 11 August 1999. Her allegation that she did not know what she had signed was so unsatisfactory that Yuen JA was right to take that into consideration in deciding whether or not to grant leave. 28.As for allegation regarding the 1st defendant, Yuen JA dealt with that in paras. 47 and 48 of her decision. We agree and have nothing to add. 29.It followed that in our view the decision of Yuen JA is unassailable. That was why we dismissed the appeal from her. Appeal from Yam J 30.We returned to deal with the appeal against Yam J. The plaintiff has applied for an extension of time to serve a respondent’s notice, which was not opposed by Mr Wong. In the respondent’s notice the plaintiff asked that the decision of Yam J be affirmed on the ground that there was no or no sufficient evidence that the 2nd defendant had no notice of the writ of summons delivered before the judgment dated 31 January 2000. 31.Mr Wong relies on O. 10 r. 1(3) which provides that in the event of a service by post:
32.He referred as to para. 13/9/5 Hong Kong Civil Procedure where this sentence appears:
33.We do not read this as suggesting that the court must accept a defendant’s assertion no matter how improbable. 34.It is quite clear from Forward v West Sussex County Council, cited above, that a defendant is required to provide “convincing evidence”: at 1473G. The Master of the Rolls went on to say of the judge that “He was in our view quite right to be sceptical of the contention that the 4th defendant had not received the writ in the absence of compelling evidence to show that it had not been forwarded on to him, as would in the ordinary course be accepted”: at 1474H. Of course, how much evidence is required must depend on the circumstances of the particular case. 35.Here, the address of service was the business address of the 2nd defendant. It was the address given by her in her summonses to set aside the judgment. The evidence shows that was the address used by her and occupied by her staff at the time of service. 36.Moreover, she has not denied receipt of the letter before action dated 17 November 1999 addressed to the same address. 37.The 2nd defendant’s evidence on this can be found in her affirmation dated 9 March 2004:
She was supported by an affirmation by 錢惠君of the same date:
38.But, as the affirmation of Sung Sze Hang dated 27 January 2000 on behalf of the bank shows, the writ was served by registered post addressed to the 2nd defendant. That being the case, there is no reason why the letter should not have been seen by the 2nd defendant. 39.Given the unsatisfactory nature of the explanation, we are not satisfied that she has succeeded in showing the contrary. In other words, we are not satisfied that she did not have notice of the writ at the material time. 40.Indeed, we would go further and say that her explanation is incredible. Bearing in mind the receipt of the letter of demand dated 17 November 1999, we regard as incredible her allegation that her staff would have simply passed an envelope addressed to her to the 1st defendant. Or that if her staff saw a writ with the 1st defendant’s name on it as well as hers, they would have passed it onto the 1st defendant without telling her. 41.Since we are of the view that she had not shown that she had no notice of the writ at the material time, the judgment must on any view be regarded as regular. We agreed with Yam J that she had not disclosed any defence on the merits. 42.Mr Wong also submitted that O. 10 r. 1(3)(b) had not been complied with because the affirmation of service had not followed the exact wording of O. 10 r. 1(3)(b)(ii). But that rule only requires that “any affidavit proving due service of the writ must contain a statement to the effect that … (ii) in the case of service by post, the copy of the writ has not been returned to the plaintiff through the post undelivered to the addressee.” Here, para. 3 of the affirmation of service affirmed that “As at the date hereof, the envelope has not been returned by the Post Office through the Deed Letter Service”. We believe that is a sufficient compliance with O. 10 r. 1(3)(b)(ii). 43.Mr Wong also complained that no evidence of posting has been produced. But, the 2nd defendant had not expressly challenged the posting of the letter containing the writ. Her case was that she had not seen it for the reasons disclosed and quoted in para. 37 above. So it is not surprising that the bank simply relied on the affirmation of service. We have no reason to doubt the correctness of the affirmation of service. 44.Lastly, Mr Wong took the point that since the letter terminating the guarantee dated 20 May 1999 was received by the bank on 10 June 1999 and that by virtue of clause B3 of the guarantee, her liability under the guarantee crystallised on 10 September 1999. But the claim was based on the amount outstanding as at 6 December 1999. 45.But, it is clear from the bank statement produced that the amount outstanding on 10 September 1999 was in excess of $735,949.24, which was the amount outstanding as at 6 December 1999. There is no evidence from the 2nd defendant that the bank statement was wrong or that the judgment had been entered for too much. So there is nothing in this point either. 46.For the above reasons, Yam J was correct in dismissing the 2nd defendant’s appeal against the Master’s decision. Accordingly, we have dismissed her present appeal with costs.
Mr Peter Ng, SC and Mr Bernard Man, instructed by Messrs K W Ng and Co., for the Plaintiff Mr Arthur Wong, instructed by Messrs Ho & Ip, for the 2nd Defendant |
Cases cited in this judgment